DUFFY v. RANGER SECS. CORP.

By an order to show cause, the plaintiffs in this action initially sought a preliminary injunction barring Mr. and Mrs. Durkin, two of the forty or more defendants herein, from selling certain shares of stock of Pocono Downs, Inc. The defendants not only opposed the petition for the preliminary injunction, but also moved to dismiss the action on several grounds. Plaintiffs subsequently withdrew their request for the preliminary injunction, and, by consent, an order was signed dismissing the petition with prejudice.

From the amended complaint it would appear that plaintiffs' claim is founded upon an alleged option to purchase ten percent of the stock of Pocono Downs, Inc., a Pennsylvania corporation which owns and operates a race track in northeastern Pennsylvania.

The following may be gleaned from the voluminous documents and briefs submitted in this action:

The Pennsylvania Harness Racing Commission had announced its intention of awarding a license to conduct harness racing in northeastern Pennsylvania. Two groups organized corporations to seek this license. One was Pocono Raceways, Inc., and the other Anthracite Raceway, Inc. At the suggestion of the Harness Racing Commission a plan was devised whereby both groups could participate in the corporation which would be awarded the license.

Under the terms of this plan, which was consummated in August of 1962, the Pocono Raceway group was to receive options to purchase forty percent of the outstanding stock of Anthracite Raceway, Inc. These options were to be valid for sixty days following the award of the harness racing license to Anthracite, an event which took place on August 24, 1962. The options were issued in the names of Ross D. Miller, Charles Epstein, Robert C. Duffy (not a relation of the plaintiffs) and M. David Smeltz. The option issued to Smeltz for ten percent of Anthracite's shares, was not effectively exercised within the prescribed sixty-day period, and Anthracite refused to issue shares to Smeltz when he tendered payment after the expiration of the option.

In 1963 Anthracite changed its name to Pocono Downs, Inc., and it has since been recapitalized several times resulting in an increase both in the number of authorized shares, and the number of shares actually issued.

Basically, plaintiffs' claim for relief is founded upon the assertion that they were the beneficial owners of the option which was issued by Anthracite to Smeltz. Apparently, it is from this Smeltz option that plaintiffs assert a claim or right to subscribe to ten percent of the shares of Pocono Downs, Inc. This, it would appear, is the basis upon which plaintiffs predicate their request for relief that the court order that the Smeltz option be exercised in their favor.

Plaintiffs' ownership of the option, which admittedly was issued in the name of M. David Smeltz, is in serious dispute. It has been the subject of various litigations in the courts of Pennsylvania, some of which are still pending. From the submissions it would seem that this court is the fifth judicial forum in which the ownership of the Smeltz option has been presented for adjudication.

It is noted further that Smeltz, a party in the Pennsylvania litigation, is not a party in the present action. Clearly, therefore, any determination of the crucial issue of the stock option might well be prejudicial to Smeltz who has commenced suit in Pennsylvania asserting his ownership of the option. Moreover, it is beyond the power of this court to issue a judgment which would be binding upon Smeltz and dispositive of this litigation. Hence, several defendants have properly indicated that any attempt at a final adjudication in this action would be inequitable since they may likely be subjected to additional lawsuits by Smeltz.

In view of the withdrawal and dismissal with prejudice of the request for the preliminary injunction, no useful purpose will be served in discussing the various grounds which required its dismissal. Suffice it to say that, even apart from the equitable considerations which barred the granting of the equitable relief sought, the opposing motion papers demonstrated clearly that plaintiffs had made no showing that they were likely to succeed on the merits of the action. Indeed, it seemed evident from the pleadings that plaintiffs had not pleaded a valid cause of action or one upon which this court could have granted relief.

Devoid of gloss, plaintiffs seek a determination of their asserted ownership of an option contract issued to another person in 1962 in the state of Pennsylvania. The defendants, therefore, in their affidavits, state that plaintiffs have not pleaded a valid cause of action under federal law; that there is no proper venue in the Eastern District of New York; that the cause of action is barred by the statute of limitations; and that plaintiffs are presently seeking similar relief under Pennsylvania law in the courts of that state. For the foregoing, and other additional and specific infirmities, the defendants have moved to dismiss this action.

Some of the defendants have raised defenses specially applicable to them in support of their motion to dismiss. For example, the defendants National banks indicate that venue in this District is improper as to them under clear and mandatory provisions of the National Bank Act. They cite Section 94 of that Act, and other controlling authorities, to show that a National bank may be sued only in the District in which it is established. 12 U.S.C. § 94; Mercantile National Bank at Dallas v. Langdeau, 371 U.S. 555, 83 S. Ct. 520, 9 L. Ed. 2d 523 (1963); Cope v. Anderson, 331 U.S. 461, 67 S. Ct. 1340, 91 L. Ed. 1602 (1947); Klein v. Bower, 421 F.2d 338 (2 Cir. 1970); Bruns, Nordeman & Co. v. American National Bank and Trust Co., 394 F.2d 300 (2 Cir. 1968), cert. denied, 393 U.S. 855, 89 S. Ct. 97, 21 L. Ed. 2d 125 (1968).

Whether plaintiffs' claim be regarded as one based on contract, or sounding in tort for fraud, practically all of the defendants urge that the claim is barred ...

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